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  • Writer's pictureCosmas Chukwuma

Saving Money on Remittance: How Blockchain is Making it Possible

Updated: Dec 19, 2023

Blockchain and remittance image
Remittances and Blockchain

What is remittance?

Remittance means "sending back." It is the process of sending money, and it holds significant importance worldwide. It constitutes a fundamental component of the global economy, exerting substantial influence on global finance. Remittance takes various forms, including domestic money transfers and cross-border transactions. Migrant workers leverage remittances to send money from one country to support their families in their home country, just as parents use them to provide financial support to their children or wards studying in another country. Besides individual transactions, businesses also do remittances by transferring funds abroad, usually to settle suppliers, pay for machinery, or others, contributing to the global flow of capital. Additionally, individual countries utilize remittances as a means to settle off-balance payments.

While remittance generally refers to the transfer of money, this article will focus primarily on cross-border remittance transactions, exploring the nuances of international money remittance and its impact on individuals, families, businesses, and the broader global economic landscape.

Problem with traditional remittance systems.

The World Bank published a press release estimating that global remittance flows reached $589 billion in 2021, with the majority of these funds received by developing countries. The World Bank also reported a massive 7.3% growth in remittance flows in 2021. However, remittances have become more expensive and increasingly burdensome for people who rely on them. The involvement of multiple intermediaries in global remittances has made cross-border payments slower and more costly.

The advent of blockchain technology has brought major relief because it has the potential to restructure the entire remittance industry, making it more affordable, quicker, and more secure. In this post, we will explore how blockchain can make remittances more affordable and highly secure.

Blockchain Technology

Blockchain technology is reshaping many traditional industries, including the financial sector. While many have heard of "blockchain" and its associated technology, only a few truly understand its meaning and potential use cases.

A blockchain is a digital ledger that stores transaction information securely and transparently between parties without the involvement of third parties, such as banks or money transfer operators like Western Union. It functions similarly to a decentralized database or digital ledger that records all transactions. Information on a blockchain is stored in blocks and linked together. This forms an immutable record of every transaction.

One key advantage of blockchain technology is its data integrity and permanence. Each transaction on the blockchain is encrypted and synchronized across multiple computers, making it highly resistant to tampering. Additionally, its decentralized nature eliminates the need for intermediaries, reducing costs and expediting processes.

The Global Impact of Blockchain

Blockchain technology has gained prominence in many industries, with its impact most evident in trade and financial services. Previously, international transfers relied heavily on multiple intermediaries from various financial institutions, including Western Union, MoneyGram, and traditional banks: the sending bank, the central bank, correspondent banks, and the destination bank. Each of these entities charged a fee for their services during a single financial transaction, resulting in significant transaction costs and protracted processing times. However, blockchain technology is actively addressing these challenges.

Blockchain technology has introduced security and transparency into financial transactions, particularly international transfers. The banking industry is increasingly vulnerable to disruption by blockchain-based solutions. Commercial banks may need to adopt blockchain technology or risk falling behind. Blockchain simplifies cross-border money transfers, enabling people and businesses, especially those in developing countries, to access financial services and participate in the global economy.

The Process Behind Blockchain-Based Cross-Border Remittance Services

Blockchain-based cross-border remittance technology has provided users with a more secure and cost-effective means of transferring money internationally. How has this been achieved? Well, blockchain technology leverages the benefits of distributed ledger technology to enhance the efficiency, security, and cost-effectiveness of international remittances.

When a sender initiates a cross-border transfer through a blockchain-based remittance platform, the transaction is automatically recorded in a distributed ledger, creating a transparent and unalterable record of all transactions. Subsequently, the network's participants update and verify transactions on the ledger, guaranteeing transaction legitimacy, cutting down on fraud, and drastically lowering the risks associated with financial security.

Blockchain technology employs smart contracts to automate remittance processes. These contracts are self-executing and programmed to release funds to the recipient automatically when specific conditions are met, such as successful verification and exchange rate criteria. These eliminate the need for intermediaries and reduce transaction costs.

The Role of Blockchain in Saving Cost for Remittances

Blockchain technology has demonstrated substantial potential for transforming the remittance industry by facilitating faster transactions that are cost-effective and highly secured.

There are numerous ways in which blockchain technology reduces the cost of remittances:

Lower Transaction Fees

Remittances have traditionally incurred high costs due to the involvement of intermediaries such as banks and money transfer operators like Western Union. Blockchain technology eliminates these intermediaries, significantly reducing transaction fees. As of June 2023 World Bank reported the average cost of remittances to be approximately 6.25% of the total amount sent. Another report by the World Bank indicates that blockchain-based remittance services can reduce remittance costs by as much as 90%.

Faster Transactions

Blockchain empowers peer-to-peer (P2P) transactions, leading to faster transaction times by eliminating intermediaries. With P2P, remittance transactions can be completed within minutes, unlike the days or weeks often required by traditional methods.

Increased Security and Transparency

Blockchain enhances the security and transparency of remittance transactions. The distributed ledger instantly verifies the identities of both the sender and the receiver, facilitating fund transfers. This eliminates the risk of fraud, as participants can track their transactions in real-time.

Elimination of Intermediaries

Traditional remittances involve multiple intermediaries, including banks and money transfer operators, which increases costs. Blockchain solutions eliminate the need for intermediaries, enabling senders and receivers to conduct transactions directly, thereby reducing remittance costs.

Examples of Blockchain-Based Remittance Services

Many innovative companies are actively participating in the evolution of blockchain-enabled remittance payments in the industry. Here are some examples:

InstaReM: InstaReM, a Nium brand, is a Singapore-based fintech company that utilizes blockchain technology to facilitate cost-effective international money transfers for consumers and small- to medium-sized companies. It partners with several banks and financial institutions to provide its services.

Veem: Veem, formerly Align Commerce, is a San Francisco-based online global payments platform that employs blockchain technology to enable small businesses to send and receive money in local currency. The company's ledger technology ensures transparent payment records and integrates with accounting programs like Intuit, Oracle, and Xero.

Xcapit: Xcapit, based in Córdoba, Argentina, is a platform that uses blockchain technology for investment and remittance services. The platform offers financial products and services through decentralized finance (DeFi) and creates self-custodial wallets for wealth management.

SureRemit: SureRemit is a non-cash remittance service provider that offers a secure and straightforward way to make cross-border remittance payments, utilizing blockchain technology and the Remit Token.


Blockchain technology holds immense promise for transforming the remittance sector. It offers affordable, faster, and more secure transactions and can potentially combat money laundering through blockchain data analysis. Every transaction recorded on the blockchain is immutable, aiding law enforcement in tracking illegal money and transactions. Blockchain-based remittance services can reduce cross-border payment costs by up to 90% and facilitate faster international payments. Furthermore, it promotes financial inclusion by allowing individuals without foreign bank accounts to participate in the global economy through mobile wallets powered by blockchain technology. As blockchain technology continues to advance, we anticipate the emergence of more innovative solutions in the remittance sector.

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